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Green Mountain Coffee Roasters Inc. (GMCR) Gets No Respect: Bed Bath & Beyond Inc. (BBBY), Starbucks Corporation (SBUX)

This isn’t a knock on Bed Bath & Beyond or Starbucks. The home-furnishings superstore chain may very well look smashing on Buffett’s arm. Starbucks Corporation (NASDAQ:SBUX) is the darling of the java world for compelling reasons. However, even though Green Mountain has seen its stock more than triple since July, it trades at just 19 times this year’s projected earnings. Starbucks — a great company but one that is growing quite a bit slower — is priced at 27 times the same fiscal year’s bottom-line target.

I get it. Starbucks Corporation (NASDAQ:SBUX) has the killer brand. Right. The baron of baristas is worthy of a healthy market premium. Sure. Why is Green Mountain still a pundit punch line after proving that it could overcome last year’s K-Cup patent expiration and still deliver strong double-digit growth?

Meet Wally Sparks
If you’re going to be slammed by consumers, partners, or financial journalists, let it be the folks with the venomous pens. They’re the only ones who won’t get in the way of a company’s actual growth.

The public is still gravitating to single-serve java. Even after the K-Cup patent expiration, food giants — Starbucks included — continue to strike deals with Green Mountain. Last week, it was Unilever plc (ADR) (NYSE:UL) moving to get its Lipton tea brand into hot and iced Green Mountain portion packs.

Some skeptics played down the importance of the Lipton deal in light of the small rally that followed, but it’s really not about the number of Lipton servings that will sell on Keurig. It’s really about respect. It’s about the respect that comes from a food giant that could have easily put out its own K-Cups since last September’s patent expiration, but chose to play along because it respects the distribution reach of Green Mountain and also wants to make sure that it’s on the right side of the patent-protected Keurig Vue platform that was introduced last year.

Consumers, partners, and investors respect Green Mountain. When will the pundits come around? The shtick is getting old.

The article Green Mountain Coffee Gets No Respect originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool recommends Bed Bath & Beyond, Green Mountain Coffee Roasters, Starbucks, and Unilever. It owns shares of Starbucks.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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